Wall Street Journal Misinforms Investors about Electric Cars

Modern Energy Roundup - August 29, 2012

Jim Jelter over the Wall Street Journal wrote his obligatory electric vehicle-bashing piece right on schedule.

After it was announced that GM has temporarily suspended production of the Volt for a month in order to address both an oversupply issue and to prepare for production of the 2014 Impala, Jelter wrote that he didn't buy it. What's to buy?

We went through this song and dance back in March. GM temporarily halted production of the Volt due to an oversupply, and the anti-EV brigade ran to tell everyone that electric cars, including the Volt, were dead. Meanwhile, since that date, nearly 11,000 Volts have been sold.

This may not seem like much. And it's not. In fact, it's well below targets. But let's revisit some other numbers from previous disruptive vehicle technologies.

When Toyota first launched the Prius Hybrid in 1997, the Japanese automaker sold only 3,000 units. GM sold 7,671 units in its debut year. So in its first year, GM sold 4,671 more units of a plug-in hybrid electric vehicle.

And look at the all-electric Nissan LEAF. In its first year, Nissan sold more than 20,000 units. And let me remind you that the LEAF carries with it the issue of range anxiety – something Prius owners never had to deal with. So essentially, we're talking about a vehicle that requires the driver to make some pretty major changes in operating and fueling behavior.

Anytime you ask the consumer to do something differently than he's done for years, it's a monumental task. Yet more than 500% more units of the Nissan LEAF were sold in year one compared to the Toyota Prius in its debut.

Today, Toyota has sold more than 3 million units of that particular vehicle.

I'm not sure if ol' Jimbo thought electric cars would bust out of the gate, selling millions in a matter of years. But I would suggest he, and other EV haters take a look at previous technologies that took decades to develop – but are now standard for most Americans. Cell phones, high-speed Internet. Hell, even what is now the outdated conventional internal combustion vehicle.

It was in 1903 when the president of the Michigan Savings Bank told Henry Ford's lawyer that the horse was here to stay, and the automobile was only a novelty – a fad. We know how that one worked out.

Of course, the Volt story was really just used as a segue for an attack on the latest fuel economy standards that'll take our CAFE up to 54.5 miles per gallon. Claiming that it will tack on another $3,000 to production costs, the new standard is being vilified. Never mind the fact that by 2025, when the standard will be reached, 87 Octane will likely cost you anywhere between $7.00 and $9.00 a gallon.

Now I fully admit, I rarely agree with much government intervention in these situations. Quite frankly, perhaps the market can get us to the 54.4 mpg fuel economy standard by 2025 on its own. But being that this really is a matter of national security, I don't see much of a downside to this new CAFE standard. I'd certainly rather take these types of steps to displace foreign oil, then keep our military in the Middle East to protect and secure oil supplies.

Of course, none of this really matters. At this point, partisan slavery always wins out over rational policy. And while I wish guys like Jelter would stop contributing to the illusion that electric cars are failures, I at least give him credit for acknowledging that, as a nation, we are struggling to get long-term planning in place – because of politics. Following on his brief coverage of Romney's joke of an energy plan, Jelter writes. . .

So what is it going to be? More regulation or less?

This is exactly the kind of political sparring that drives corporations crazy. What one party puts in place, the other seeks to remove. As long as their so-called principles leave no room for compromise, regulatory matters are doomed to lurch back and forth with every election. This stifles long-term planning and kills investment.

I couldn't agree more.

Sadly, there seems to be no middle ground. And while the Wall Street Journal will continue to publish it's anti-EV rhetoric – which, quite frankly, is incredibly unpatriotic seeing as EVs require not a single drop of Saudi oil to operate, left-leaning rags will continue to sing the praises of over-regulation, which absolutely inhibits our ability to kick OPEC to the curb.